Australian Dollar posts modest gains above 0.7150 on US Treasury buyback worries

The AUD/USD pair trades with mild gains around 0.7175 during the early Asian session on Monday. The US Dollar (USD) edges lower against the Australian Dollar (AUD) amid concerns over the US Treasury's plan to expand buybacks of longer-dated government debt. The Reserve Bank of Australia (RBA) Meeting Minutes will be released later on Tuesday. 

US Treasury Secretary Scott Bessent said on Thursday that the Treasury could increase bond buybacks beyond $4 billion, partly to signal that current yields do not reflect underlying economic fundamentals. This development came after the department surprised markets by pledging to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.

"Bessent’s efforts to suppress U.S. yields haven't done much for U.S. yields, but it's undermined the dollar," said Marc Chandler, chief market strategist at Bannockburn Global Forex. "The market is pushing back,” Chandler added.  

However, rising tensions in the Middle East could boost safe-haven flows, helping limit the USD’s losses. Iran's Foreign Minister Abbas Araghchi dismissed the threat of new US sanctions as a sign of desperation on Sunday and said the expected new measures would fail to defeat Tehran. Meanwhile, Iran’s Security Chief Mohsen Rezaei threatened “earthquake-like” retaliation should US President Donald Trump take any further action. 

Australia labour market surprise adds to focus on July data

DBS points out that Australia’s latest labour market report delivered a negative surprise, with the economy recording "15.8k job losses in Jul, in contrast to analysts’ expectations for a 12k jobs increase." The bank highlights this unexpected deterioration in employment as an additional factor that will shape market scrutiny of upcoming Australia data, including the July CPI release and its implications for RBA expectations.

Technical Analysis: AUD/USD

In the daily chart, AUD/USD extends its advance above the 20-period Bollinger middle band and the 100-day moving average (MA), which now underpin a bullish near-term bias. Price is pressing against the upper Bollinger band, highlighting a stretched move, while the Relative Strength Index (14) hovering around 70.0 suggests overbought conditions that could slow further upside even as the broader tone remains constructive.

On the downside, initial support appears at the 100-day MA near 0.7072, reinforced by the 20-period Bollinger middle band clustered just below at 0.7065, with a deeper floor at the lower Bollinger band around 0.6955. On the topside, immediate resistance is defined by the upper Bollinger band at 0.7175, and a sustained break above this barrier would open the door to further gains, while failure to clear it may trigger a corrective pullback toward the mentioned support zone.